Hard times acomin’. Read the papers, turn on the television, talk to your neighbors. Pretty much everyone agrees the dazzling economic sunshine of recent years has given way to the gray storm clouds gathered over Wall Street and like venues.

What about Texas? The question has more than economic relevance (urgent as that topic might be); it resonates with philosophical meaning.

That’s to say, boys and girls, how come we look better than most other places around the country?

It isn’t that Texas glides problem-free through the present environment of challenge and some measure of deprivation. The Federal Reserve Bank of Dallas reports that manufacturing weakened in September, largely because of Hurricane Ike — whose total costs we have yet to get our arms around. Crude oil futures dropped 28 percent in the third quarter, to the disadvantage of the petroleum sector if not that of financially strapped motorists.

Even the State Fair of Texas, which opened last weekend, took some hits. Both attendance and sales are down. “Vendors of everything from hot tubs to stuffed jalapeno cookers,” according to the Associated Press, “are reporting up to an 80 percent drop in sales.”

Yet home values here have dropped less than almost anywhere else. “Texas’ housing market,” according to the Dallas Fed, “has been more resilient because of stable real estate prices and the state’s strong economy. Broad-based job growth, a relatively low cost of living, and affordable housing have attracted a large population of migrants to Texas.”

So not bad, especially compared to California, whose $15.2 billion state budgetary deficit, until recent days, kept lawmakers and Gov. Arnold Schwarzenegger focused on the lamentable question of who loses what.

So dire was the state of things in the Golden State that Schwarzenegger, in August, ordered that pay be cut to minimum wage level for up to 200,000 state workers – who proved in the end luckier than the 10,000 colleagues who got pink-slipped. A month later, school districts, community colleges, local governments, and numerous vendors were waiting impatiently for $4.2 billion in payments owed them by the state. Arthur Laffer, the father of supply side economics, took the opportunity to note for the benefit of the Texas Public Policy Foundation that Texas was just a whole lot better place to do business than California.

Hard times, if nothing else, occasion hard thinking about what works and what doesn’t work. A few words about the ingredients of Texas’ comparative success will never come amiss. Nor will these be the last such words to be required in coming months.

Texas’ advantage over other states, including California, consists in the state’s hospitality to the profit motive. Texas, in other words, is a fine place to do business.

Item: It lacks a personal income tax. The worker here gets a larger reward for his work; he keeps, in other words, a larger share of what he earns. The right to that reward spurs him on. He can earn more, then more still, without the state’s share rising proportionately. Whereas Californians pay nearly 12 percent of personal income to the state, Texans pay a couple of percentage points less.

Item: Lack of income tax restrains the ambitions of government, which – you’d better believe it – finds public uses for every dollar it receives. Less government means a larger sphere of freedom, which means commensurately more scope for work and investment. Milton Friedman used to say, if you want more of something, reward it; if you want less, penalize — that is, tax — it. (A too-little-noticed feature of free market economics is its grounding in good old common sense.)

Item: Belief in the beneficial purposes of business reduces the governmental temptation to regulate, run, control, oversee, you name it, the whole range of businesses that operate here. Regulation of some sort we have now and always will – fire safety codes, the Railroad Commission, etc., etc. The know-it-all sort of regulation – i.e., here’s how to run your business – is the kind Texas keeps to a minimum, the marketplace in general being a better sorter-outer of efficiency and fairness than the regulatory state.

We’re no economic Promised Land, heaven knows. Every Texan, howsoever employed, has at least one idea for the elimination of unnecessary impediments to progress. Yet our record of impediment-prevention remains a remarkable one by most standards, certainly including those of California. That’s why the dark clouds of the present moment, as they pass over Texas, open up a bit. It is a good place to live. Still.

Comments (5)

Comment	smaller | bigger
Name
Write the displayed characters
Subscribe via email (Registered users only) I have read and agree to the Terms of Usage.
	Add Comment